Blue Whale News, September 6th - Recently, Wing Yip Food Holdings Group Limited, the holding company of Guangdong Rongye Food Co., Ltd., updated its prospectus at the US Securities and Exchange Commission (SEC).
According to the latest prospectus, the company has adjusted its financing strategy and plans to issue 2 million American Depositary Receipts (ADS) at a price of $4 to $5 per share, aiming to raise approximately $9 million in funds, a 20% reduction from the original target.
This sprint to go public on NASDAQ is not the first time that Rongye Food has entered the overseas capital market. In 2018, this company was already listed on Kosdak in South Korea.
Why does Rongye Food want to rush into the US stock market again after being listed in South Korea for 6 years?
Renowned strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, Zhan Junhao, believes that its strategic objectives may include further expanding financing channels, attracting more international investors, and enhancing the company's visibility and influence in the global capital market. At the same time, this may also help Rongye Food better achieve its internationalization strategy and promote its business expansion on a global scale. Through dual listing, Rongye Food can access more international capital and market resources, providing more impetus and support for its future development.
The troubles of time-honored brands
Rongye Food is a meat processing company that mainly sells pickled meat products, snack products, and frozen meat products. Rongye preserved meat originated during the Guangxu period of the Qing Dynasty and has a history of over 100 years, spanning four generations.
In terms of equity structure, prior to this issuance, Xiantao Wang, Chairman of Rongye Food, held 16.71% of the shares, while Tingfeng Wang, CEO, held 26.96%.
From the perspective of performance, this' Guangdong time-honored brand 'is also facing growth challenges. In recent years, not only has its revenue scale been difficult to break through, but its overall net profit has also experienced negative growth.
From 2021 to 2023, Rongye Food achieved revenue of $134 million, $131 million, and $134 million respectively, hovering in the $130 million range; The corresponding net profits are approximately 16.567 million US dollars, 11.194 million US dollars, and 14.099 million US dollars, respectively, with a fluctuating decline in profits. In the first half of 2024, its revenue was 68 million US dollars and net profit was 8.88 million US dollars.
From the perspective of revenue structure, cured meat products are the company's pillar business, contributing over 60% to the total revenue. In 2022, 2023, and the first half of 2024, this business generated revenue of $88.393 million, $83.276 million, and $39.752 million for Rongye Food, respectively. However, its proportion in total revenue continued to decline, accounting for approximately 67.17%, 61.94%, and 57.92%, respectively.
Although the profit level has lacked growth potential in recent years, Rongye Food still has a strong market share. According to Frost Sullivan data, by 2022, the top five salted meat products processors in Chinese Mainland accounted for 36.7% of the market share (calculated by retail sales), and Rongye Food ranked second with a market share of 9.2%.
From the perspective of sales channels, Rongye Food carries out business through its operating subsidiaries in Chinese Mainland. Sales are mainly through offline channels, mainly through 7 self run stores, 72 distributors (including large retail stores and supermarkets) and 7 e-commerce platforms in 18 provinces of Chinese Mainland. Among them, 7 self operated stores are all located in Guangdong Province. Although e-commerce channels have been established, the proportion of revenue from e-commerce currently contributes very little, less than 5%, and sales are highly dependent on offline channels.
Cross border pre made dishes and restaurants
In addition to the brand "Rongye" marinated meat, Rongye Food has also expanded its new product line and developed snack product brands "Jiangwang" and "Kuangke". By increasing the promotion of snack products, Rongye Food's snack products achieved revenue of 35.906 million US dollars, 43.636 million US dollars, and 25.219 million US dollars in 2022, 2023, and the first half of 2024, respectively, accounting for 27.48%, 32.83%, and 36.75% of the total revenue.
It is reported that as of June 30, 2024, Rongye Food has a total of 120 snack products, accounting for 31.83% of its overall product range.
We will also use marketing strategies such as brand upgrading, innovative packaging design, and virtual idol AI live streaming to better attract young consumers and meet their needs for delicious snacks and brand experience. At the same time, we will continue to expand distribution channels such as convenience stores and vending kiosks to integrate our products more widely into the daily lives of young people. "Rongye Food stated in its prospectus that it hopes its snack business can provide strong support for its future development strategy.
In the prospectus, Rongye Food also disclosed its future business plans. The future growth strategy is to focus on the pre packaged food track, while also laying out multi-channel layouts in the B-end and C-end. We not only provide customized pre made meat products for chain catering brands, but also develop new pre made dishes for C-end consumers.
But in the field of pre packaged food, many powerful enterprises have already gathered. Not only are there new e-commerce forces such as Hema and JD Supermarket, but also well-known catering brands such as Guangzhou Restaurant and Quanjude, and even traditional frozen food enterprises such as Anjing, Sanquan, and Nian. Rongye Food faces significant competitive pressure in the pre packaged food market.
Zhan Junhao believes that Rongye Food can focus on product innovation and develop more pre made food products that meet consumer tastes and health needs. At the same time, strengthen marketing and channel construction, enhance brand awareness and market share. Rongye Food can also consider collaborating with advantageous enterprises in the supply chain to jointly develop new products, expand market share, and achieve win-win development.
In addition, Rongye Food has announced plans to expand its downstream catering business. According to its prospectus, the first chain bacon Little pan rice restaurant opened in July this year will introduce franchise mode in addition to self operation mode.
Whether Rongye Food, which actively explores side businesses, can successfully unlock new growth codes still needs to be verified by both market and time tests.